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Commentary

How Blockchain Can Improve Trust in Mobile Advertising

Consider the following: Between 2017 and 2018, mobile ad fraud just about doubled, according to Adjust. Close to 80% of all programmatic buyers lacked transparency for media buying. And
over half of mobile advertisers now classify privacy concerns as an “urgent issue.”

In light of these challenges, is there a solution? Recently, there have been several efforts to
marry blockchain and ad tech. What role can blockchain play in eliminating advertiser concerns and promoting greater transparency?

Blockchain combines encrypted messaging and public ledgers to
help ensure fairness. However, it becomes difficult to defraud and get away with it. If one person disputes a transaction, thousands of others can jump in to mitigate. Blockchain has the potential to
resolve transparency issues. As a result, advertisers and publishers will have a trustworthy record of where ads have run, viewability and measurement. Despite the potential, leveraging
blockchain in ad tech has been difficult for several reasons including data security. A single, open blockchain cannot work for digital advertising. Sensitive data on individuals cannot be
public, and it may be necessary to share information with a few parties only. For example, proprietary advertiser data should only be shared with certain partners.

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There’s also the
question of where the burden of proof will come from. With Bitcoin, mining cryptocurrency acts as an incentive. An ad tech blockchain requires a similar incentive, or a solution that is devoid of any
burden of proof.

There are also technology challenges. Current ad tech operates across billions of devices all over the world, serving hundreds of billions of ads in real time. Blockchain,
unfortunately, caters to only a few million users today. The median time taken per transaction runs in minutes leading to low throughput, making current blockchain insufficient for ad tech
challenges.

Blockchain efforts that cannot scale or guarantee data security will fail. It also needs to be open enough for potential checks and closed enough to protect data at the same
time.

But there may be ways to move forward with blockchain in ad tech.

Let’s consider all the enterprises in the advertising ecosystem like advertisers, publishers,
tracking partners, attribution partners, etcetera as “Agents” and all the devices on which users watch or rather consume ads as “Nodes.” Each node has a
secure ledger or a timestamped system of record to store all the user’s interactions with ads such as view, click, install, video completion, on that device. The user has full control over
his/her data around their ad preferences and personally identifiable information in this private ledger on device.

Similarly, agents can have a separate private ledger for maintaining
and transacting the data around its campaigns, installed base, segments, transaction data, business metrics. The advertiser can share this private ledger with its attribution partners, trackers, fraud
detectors and other parties that add value to its dollar spend. With this, an advertiser can keep its proprietary information within the secure net shared with only trusted partners.

Many challenges are solved through this approach, but this still doesn’t build much-needed trust. This calls for a public registry of sorts, which stores IDs like agent IDs and metadata for
all the agents and users.

In the event of repeated suspicious transactions emanating from an agent or a user, this public blockchain can blacklist them.

This can be
considered a hybrid system, where the node level private ledgers managed by users and private ledgers of agents will put the right checks and balances to weed out fraud through the public
registry ledger.

Such an approach can coexist with or augment current stacks and doesn’t require mining. All stakeholders have incentives to participate and collaborate in
this.

Serious efforts are underway at the industry level, with the IAB Tech Lab forming a working group to demonstrate the application and value of blockchain in ad tech.

Timing is uncertain. But with growing concerns around fraud, data privacy and mistrust
in the ad tech ecosystem, the need for blockchain will only grow.